Credit: Interest Rates

(asked on 9th March 2016) - View Source

Question to the HM Treasury:

To ask Her Majesty’s Government what they are doing to ensure that the Financial Conduct Authority raises standards in the consumer credit market by requiring that all firms stress test their products and lending decisions against the needs of vulnerable borrowers so that credit is used in an affordable and sustainable way.


This question was answered on 23rd March 2016

The Government has fundamentally reformed regulation of the consumer credit market, transferring regulatory responsibility from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA) on 1 April 2014.

The FCA requires lenders to treat all their customers fairly, and provides examples of good practice in identifying and interacting with vulnerable customers.

The FCA has also turned key elements of the OFT’s Irresponsible Lending Guidance into binding rules that are based on the principle that money should only be lent to a consumer if they can afford to repay it. These rules set out that a firm should assess the customer’s creditworthiness, having regard to:

  • the potential for the commitments to impact adversely on the consumer’s financial situation, and

  • the consumer’s ability to make repayments as they fall due.

    The Government has ensured that the FCA has robust powers to protect consumers and it has a broad enforcement toolkit to punish breaches of its rules; there is no limit on the fines it can levy.

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